Falls under Negative List.

[Anil Gagneja]

Dear Sir,

 We have registered under 12A(a) of the Income tax Ac, 1961.

 Can we falls under the exempted category as mentioned in Not. 25/2006 vide para 4 of Service Tax. ?

 What are the procedure to follow for the same?

Thanks in advance.

[JAMES PG]

Simply having registration with  IT Dept under Sec 12 AA will not be qualifying for any exemption under Service Tax.If you are so registered and doing any one or more of the following  specified charitable activities, then only exemption from ST is available:

Following are the specified charitable activities:-

(a)  public health by way of-

  (I)  care or counseling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

 (II)  public awareness of preventive health, family planning or prevention of HIV infection;

(b)  advancement of religion or spirituality;

(c)  advancement of educational programmes or skill development relating to,-

  (I)  abandoned, orphaned or homeless children;

 (II)  physically or mentally abused and traumatized persons;

(III)  prisoners; or

(IV)  persons over the age of 65 years residing in a rural area;

(d)  preservation of environment including watershed, forests and wildlife; or

(e)  advancement of any other object of general public utility up to a value of twenty five lakh rupees in a financial year subject to the condition that total value of such activities had not exceeded twenty five lakh rupees during the preceding financial year.

[Aliasgar Tambawala]

In this regards I would like to know whether the services provided by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) shall be by way of charitable activities or whether the proceeds of the services provided shall be used for charitable activities?

 

For instance, can the above-mentioned Exemption Notification be interpreted to cover Renting of commercial property by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) under leave and license agreement to a licensee being a business entity (being services provided by an entity registered under section 12AA of the Income tax Act, 1961 (43 of 1961) and the licensee fees thereof being utilized for advancement of religion or spirituality?

[JAMES PG]

If a registered entity under Sec 12AA is renting  out commercial property  to a business entity , it is a taxable service and it attracts Service Tax irrespective of the fact that the proceeds there from are used for charitable activities.

AI Summary

Charitable activity exemption: registration alone doesn't exempt from service tax; renting commercial property remains taxable. Registration under charitable income tax provisions does not automatically exempt services from service tax; exemption applies only where the service provided falls within the notification's specified charitable activities (public health, advancement of religion or spirituality, certain educational or skill programmes for defined beneficiaries, preservation of environment, and limited public utility activities subject to monetary limits). Renting commercial property to business users by a registered charitable entity is a taxable service even if the proceeds are used for charitable purposes.